ARTICLES

Beware of the Timeshare!

Timeshares are an extremely popular way for people to own a fractional share of a vacation property without having to fully commit to a specific location or the rigors associated with owning (and possibly leasing out) a fee simple interest in a property the owner may only visit three or four times per year.  However, timeshares are not without risks; especially if considering a timeshare in a foreign country.

Expiration Date

Timeshares generally fall into two categories; timeshares in which you own a fee simple interest that can be passed to your heirs in perpetuity, and timeshares in which ownership interest expires at some future date.  While a fee simple interest in a timeshare is generally more expensive, once you own it, you own it forever until you sell it.  A timeshare ownership interest will usually expire twenty to thirty years from the date of purchase.  If you pass away before the expiration of the timeshare interest, you can generally pass the interest to your heirs.  However, once the timeshare interest expires, your interest or the interest of your heirs in the timeshare ends.

Jurisdiction

By purchasing a timeshare in a foreign country, you are generally subjecting yourself to the jurisdiction of the courts in the country in which the timeshare is located.  Keep in mind, these courts do not operate like those in the United States – you may have a distinct disadvantage as a foreigner.  In some instances, your ownership interest may be subject to both the courts of the country in which the timeshare property is located and a court in the United States.  Generally, in such a case, any dispute related to the actual property will be venued in the foreign court; any dispute related to the payment of money may be venued in the United States.  Foreign timeshare companies include this dual jurisdiction clause so that if a dispute is in regards to money, the foreign timeshare company can pursue a judgment against you in the United States where it can attempt to collect upon a judgment.  It is extremely important to thoroughly review the purchase documents to ascertain where any disputes regarding the timeshare property or your relationship with the timeshare company will be venued, and what law will be applied to decide any such matters.

Remember, a judgment entered against you in a foreign country creates a completely different situation –  it is something to be taken very seriously, especially if you intend to return to that country at some point in the future.  Moreover, fighting a claim in a foreign country can be a very costly endeavor in which you have to retain an attorney in that country and operate under laws that may vary greatly from the laws of the United States.

Beware of Offers to Sell Existing Timeshare Units

As with the entire real estate industry, the timeshare market has seen a significant decrease in value over the past two years.   As a result, timeshare interests are often worth less than what they were purchased for several years ago, making it very difficult for timeshare owners to sell their interests.  Accordingly, many timeshare companies attempt to lure new purchasers by either offering to sell the existing properties of potential purchasers or offering to connect the potential purchasers with companies, often referred to as “affiliates” that purportedly can sell the existing timeshare units.  Unfortunately, in many cases, this simply is not true.  The company marketed as the purported “broker” for the existing units is often only a marketing arm of the timeshare company that will list the existing property on the internet without any ability to actually handle a sale.

The Documents Control

When contemplating a timeshare purchase, it is extremely important to remember that the purchase documents will generally control the transaction and any related disputes.  When in doubt, refer to the documents, not what a sales agent may be telling you.  More importantly, you should never sign anything you are not fully prepared to abide by.

For more information or assistance with timeshare and other contractual issues, contact the Minneapolis Contract Attorneys at Skjold ▪ Barthel, P.A. at 612-746-2560.